What role does mutual consent play in agency relationships?

Mutual consent is fundamental in establishing an agency relationship, as it signifies agreement between the principal and the agent regarding the terms and conditions of their relationship. This mutual agreement ensures that both parties understand their roles, responsibilities, and the scope of authority that the agent will have to act on behalf of the principal. An agency relationship cannot exist without this consent; it is what differentiates a legitimate agent from one who may act without authority.

The presence of mutual consent provides a legal basis for the agent to undertake actions on behalf of the principal, thus enabling the performance of tasks that are intended to benefit the principal. This concept underlies the essential principle of agency law that requires clear and mutual agreement to honor the roles within the relationship, making it a cornerstone of forming valid agency arrangements.